Greenhut Dissects State of the Union

John Seiler:

Writing on Bloomberg, our colleague Steven Greenhut dissected President Obama’s State of the Union speech. You can read the whole thing there. But here’s the part on California:

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Steven Greenhut:

He called for a new era of responsibility, yet his aid packages have promoted irresponsibility, as local officials vie for added federal dollars rather than make the hard choices necessary to deal with their debt burdens. The president spoke about underpaid public servants, referring to teachers in particular, but here in California it has been the unsustainable growth in public-sector compensation that most threatens the government programs and infrastructure-building efforts the president says are so necessary to saving our nation.

The president sees a starving public sector unable to adequately meet the needs of the public, a world where heroic teachers must dig deeply into their own pockets to pay for school supplies. But public schools are short on cash not because of a lack of taxpayer support, but because of misdirected priorities driven by a lack of competition, bureaucratic inertia and union demands….

California Schools

In California, education is guaranteed by constitutional amendment to receive at least 40 percent of the general-fund budget. Yet the system is a mess, and some of the highest-funded districts are the ones most plagued by corruption and incompetence. Obama should talk to the Democratic mayor of Los Angeles or a former Democratic state senator who leads an education-reform group about obstacles to reform, which revolve around union intransigence and bureaucracy more than funding.

Here in California the lush pay and benefit packages that many local officials have secured over the past decade are putting cities deeply in the hole, with compensation to police and firefighters often consuming 70 percent to 80 percent of their budgets. One liberal editorial page quipped that public agencies are becoming pension providers that offer public services on the side.

This threat is not just financial. San Jose Mayor Chuck Reed, a Democrat, told Vanity Fair that “Our police and firefighters will earn more in retirement than they did when they were working.” He continued, “It’s staggering. When did we go from giving people sick leave to letting them accumulate it and cash it in for hundreds of thousands of dollars when they are done working? There’s a corruption here. It’s not just a financial corruption. It’s a corruption of the attitude of public service.”

The president railed against inequality, but doesn’t mention the growing retirement chasm between workers in the public and private sectors. He criticized “bad debt and phony financial profits” but wasn’t speaking of the multibillion-dollar government pension debt or the phony rate-of-return projections used by pension funds to mask the growing debt burden.

Jan. 25, 2012